Boeing’s Endless Doom Loop Gives No Respite to CEO Ortberg

(Bloomberg) -- As Boeing Co. lurches from one crisis to the next, there’s been one constant for the embattled planemaker: Its predicament appears to be only getting worse.

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From a freak accident that blew a door-size hole into the fuselage of an airborne 737 Max to revelations of sloppy workmanship and now a crippling strike entering its second month — the icon of US manufacturing been beset by trouble since the first days of January. Cash is dwindling, plane production is anemic and the stock is heading for its worst annual performance since the financial crisis in 2008.

Now the planemaker is making another dramatic move by cutting 10% of its workforce, equivalent to about 17,000 people. But it’s a maneuver fraught with risk, given that Boeing is in the middle of testy labor negotiations and unions show no sign of giving in. Also left unanswered where details on where the cuts will occur, what they might cost in terms of severance — and if indeed the step is enough to stem the financial bleeding.

“It’s all getting a bit hand to mouth,” said Nick Cunningham, an analyst at Agency Partners LLP in London. “It is not a coherent plan as such, it is just another quarter of large charges, all of a kind the previous management would have had to make anyway, as they reflect existing and developing problems and are not part of a restructuring as such.”

In his announcement of the job cuts, new Chief Executive Officer Kelly Ortberg tucked in a hint that yet more dramatic action might be needed to get the company back on course.

“We need to be clear-eyed about the work we face and realistic about the time it will take to achieve key milestones on the path to recovery,” the Boeing chief wrote in the Oct. 11 memo to workers. “We also need to focus our resources on performing and innovating in the areas that are core to who we are.”

The comments suggest that Boeing under Ortberg may double down on the field for which it is best known: Commercial aviation. The unceremonious departure of Ted Colbert as head of the defense and space business put those subsidiary’s shortcomings into sharp relief — made more glaring still on Friday when Boeing said the unit would have about $2 billion in charges in the third quarter.